Apr 25 Uber and the use of big data, algorithms and behavioural economics in the workforce

While their methods may strike some as aggressive, Uber employs techniques taken from behavioral science 101 to steer their drivers to show up at a specific place and time, even when it may not be in their best interest to do so, according to an interesting interactive profile in the New York Times. Teams of social and data scientists developed gamification techniques, app-based graphics and noncash rewards to induce Uber drivers to work at times and places that are optimal for the company.

Analyzing the substantial data generated by its platform, Uber observed a tension between the company’s imperative to minimize the amount of time a fare must wait for a lift and its drivers’ need to maximize the amount they make in the shortest possible time. Their findings led Uber to be creatively coercive. One feature, modeled after Netflix, has the next fare pop up on a drivers’ smartphone before the current passenger is let off. Called forward dispatch, drivers must actively turn down a customer by stopping the Uber app. As most Uber drivers are male, managers will adopt a female persona, knowing it increases engagement and encourages them to keep driving.

Realizing the power of concrete goal setting, another tactic uses messaging to remind individual drivers when they’re close to a (sometimes arbitrarily chosen) financial benchmark, a technique known as income targeting. To ensure more new drivers meet the 25 rides necessary for a signing bonus, again Uber would offer positive messaging to inform them of their progress and motivate them to continue. The rationale isn’t necessarily altruistic: the company’s research indicated that after 25 rides, a driver is more likely to remain with Uber long-term. A further technique, adopted then abandoned by Uber’s rival Lyft, used the notion of loss aversion, showing drivers how much money they were losing by not driving at certain times.

As the “gig economy” becomes more mainstream, the success of Uber’s approach and its impact on driver wellbeing will be watched closely.

Uber also incorporates gamification in its interactions with drivers. Badges, which carry no financial reward, are earned for “Above and Beyond,” “Excellent Service” or “Entertaining Drive.” The app itself lends itself to the competitive nature of gamers by showing drivers how many trips they’ve completed, how much money they have made and their overall rating from passengers, all in real time.

As the “gig economy” becomes more mainstream, the success of Uber’s approach and its impact on driver wellbeing will be watched closely.

Many tech startups and their corporate venturing partners or incubators focus on hitting it big within the hot consumer markets – U.S., Europe and China – aiming to be the next Unicorn or the next big target